Yearly Bill for Pentagon’s No-Bid Contracts: $140 Billion

How much should you pay for a futuristic lightning weapon that promises to explode roadside bombs before they harm U.S. troops? Like anything, it probably depends on who you buy it from, and the Pentagon has now spent over $50 million on one being developed by Tucson-based Applied Energetics.

The company was awarded tens of millions in military contracts for its lightning weapon, all without full and open competition, and despite numerous problems in testing. In August, the Marine Corps, which was on the verge of awarding the company yet another sole-source contract for the lightning weapon, cancelled the latest $3 million deal after the commander of a unit in Afghanistan slated to receive it decided it didn’t meet their needs.

In the meantime, a competitor, called Xtreme Alternative Defense Systems, an Indiana-based firm with its own lightning-based counter-bomb technology, says it’s had good results with only a small fraction of the federal funding that Applied Energetics has received — $1.5 million. The company is preparing to test its technology at a military range. “We did our own development based on state grants” and federal funds, says Pete Bitar, the head of the company. “I cashed out my 401(k).”

The bomb fighting contract is a small example of a problem that’s been exacerbated by ten years of war: awarding contracts without competition. While Pentagon statistics say the overall level of competition has remained steady during the past decade, publicly available data show that Defense Department dollars flowing into non-competitive contracts have almost tripled since the terrorist attacks of 9/11. According to analysis by the Center for Public Integrity’s iWatch News, the value of Pentagon contracts awarded without competition topped $140 billion in 2010, up from $50 billion in 2001. That’s almost 40 percent of all Pentagon contract dollars.

And despite repeated pledges to reform the process, non-competitive contracts are a hard habit to break. According to federal data, the Pentagon’s competed contracts, based on total dollars of contracts, fell to 55 percent in the first two quarters of 2011, a number lower than any point in the last 10 years since the terrorist attacks of 9/11.

There are a number of legal loopholes that allow the Defense Department, like other federal agencies, to avoid competition and to select a single company to provide the desired goods and services. In some cases, there may be only one legitimate supplier of needed goods. Or the government can argue that is has “an unusual and compelling urgency” meriting a restriction on who can bid. Or it can judge that holding a competition would have a detrimental impact on government operations or national security.

But those exceptions have become increasingly abused, according to numerous studies. In fact, an analysis of over a dozen government reports and investigations, and interviews with former government officials and experts by the Center for Public Integrity found a number of concerns about DOD competition practices — attributable, in large part, to the past ten years of war. Those include:

The use of large umbrella contracts to purchase goods and services that could be competed individually, thus resulting in lower price;

Justifying sole source contracts by citing an “urgent and compelling need” — when, in fact, the “urgency” stemmed from an agency’s lack of planning for requirements that have been known for years.

Extending large contracts as a “bridge,” rather than holding a new competition that would allow for multiple bids.

An overall failure to utilize competition in cases that could result in cost savings and better performance.

These alarming trends haven’t gone unnoticed. Sole-source and other noncompetitive contracting practices at the Pentagon have been over the past several years the subject of numerous investigations by the Government Accountability Office, the Defense Department’s Inspector General, and the Commission on Wartime Contracting, among other government watchdogs.

The consequence, according to those investigative agencies and commissions: wasted dollars, lower quality goods and services, and in some cases, outright fraud. Or, in the case of the lightning weapons, $50 million for technology that the Marine Corps now says doesn’t meet its needs.

We’ll have more at Danger Room about the growth of no-bid contracting over the coming days, and you can also read more at the Center for Public Integrity’s iWatch News. Check back here all week, as we’ll feature some of the most outlandish sole source and noncompetitive contracts, from billions spent on cafeteria services to a massive sole-source contract given to Russia’s number one arms dealer.